Overcoming competitors with brand names that have become part of the modern vernacular is a challenge Estonia-based Bolt has set itself as it takes on Uber

Through operating efficiency and a strong focus on certain regions, Estonian taxi-hailing company Bolt is setting out its stall to create a pan-European transport-as-a-service ecosystem available to consumers via a single app.

When Bolt founder Markus Villig was 19 years old and still at high school studying computer science, he had the idea of putting the taxi services in Estonian capital Tallinn and the capital of neighbouring Latvia, Riga, onto a single digital platform. Today he not only wants the company to become Europe’s go-to ride-hailing service – not easy with Uber well entrenched in the region – but wants to create a pan-European mobility-as-a-service (MaaS) platform offering consumers multiple travel and deliver options from a single digital sign-in.

Villig initially founded ride-hailing company mTakso in 2013, which later became Taxify and is now Bolt.

Although Uber had been around since 2009, the idea for Bolt was born from Villig’s bad experiences using taxis in Tallinn. “All I knew was that taxis were a horrible experience at the time in Tallinn,” he said. “We used to have a few dozen taxi companies and you usually had to call 10 of them before you got a car, and when it turned up, you couldn’t pay with a card.”

“So we thought we should apply technology to this problem.”

Villig said the company began with the simple model of creating the platform, signing up existing taxis and allowing people who are not taxi drivers to get authorised and join. The concept is also easy to understand, he said. “The transparency of driver ratings and digital payments made it substantially better for consumers, which is why it is adopted so quickly.”

Bolt has 30 million customers who have signed up and taken a journey. In London, Bolt now has more than 35,000 drivers signed up and is Uber’s first real competition.

Still a teenager finishing school, Villig was accompanied by his parents when approaching taxi drivers to join his platform. This was the first phase of a rapid expansion. Bolt now has a presence in 35 countries and 150 cities, with its main focus on Europe and Africa. In other regions, it works with local companies that use its technology platform. It has an office in all the countries in which it operates with a total of 1,500 staff, about 450 of which are in its native Estonia.

Bolt initially set its sights on becoming Europe’s biggest ride-hailing app, and the nature of the business lends itself to a regional focus, said Villig. “With search, the business model is the same across the world, but with ride-hailing, you have to build a business city by city,” he said. “You need to start from scratch every time.”

Outside its focus regions of Europe and Africa, such as South America, Bolt partners with local firms that use its tech platform.

Bolt takes 15% commission from drivers per ride, which is 10% less than similar platforms. The end result is that customers pay less and drivers make more. The company can do this because it was built to be cost-effective from the start.

“It is hard to compete with us,” said Villig. “Initially, companies can by burning through investors’ money, but in the long term, you have to change your approach and you can’t go on with a higher commission rate.”

Asked why competitors have not cut their commission rates, Villig said: “I think this comes down to how companies are built.”

He added: “There is a tendency in Silicon Valley to think it doesn’t matter about costs. They want kill the competition quickly and create a monopoly, so costs don’t matter.

“Over the last 20 years, that was the right thing to do. It worked out perfectly for companies like Google and Facebook, but this is a different space and you can’t apply the same method.”

Villig pointed to Uber’s recent announcement that it had started to lay staff off as an example of the challenges some companies in the space will face. “I think they are realising the challenges now and cutting costs and becoming leaner, but this is not easy if you have 25,000 employees,” he said.

Using Bolt’s lean operation, Villig’s plans now go beyond taxi services, with ambitions to create an ecosystem encompassing all transport options and to deliver services across Europe, where transportation is a massive part of countries’ GDP.

The move towards MaaS, in which any form of transport can be booked and paid for via an account based on an app, is the bigger picture for companies like Bolt. Imagine a travel card that can not only be used for a city’s public transport, but to hail a taxi, rent a car, ride a bike and even order a takeaway. This is the future and the technology to make it possible is already here.

Great opportunity

Villig added: “We are looking at how we can combine the logistics network we have with public transport and we want more services in the same ecosystem, which is a great opportunity for us because no European company has done this to scale.”

Bolt is also increasing its rental business to include other vehicle types beyond scooters, which it currently offers, to expand its reach outside cities. “We can cover pretty much everything in a city, but if you want to go away in a car at the weekend, we can’t currently help, so we are looking at introducing car rental,” said Villig. “Bolt’s growth will come from enabling users to arrange deliveries. One thing is moving people, but another thing is moving things to people.

“We are still very much in the early stages of the journey. All across the world, the urban population is growing and there is a trend of people not owning cars and using different means of transport.”

Villig said the growth of emissions is a concern for many countries around the world and transport is one of the biggest contributors to that. “We feel we are on the right side of history to try and get people out of private cars and instead using a variety of other services, like ride-hailing companies and public transport,” he added.

“Despite all this hype and everything going on in this space, it is still very small. Ride-hailing is still only a tiny part of the overall traffic. In Tallinn, where Bolt has operated for six years, all ride-hailing and other taxis account for about 4% of total traffic. The rest is public transport and private cars.”

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